Early expressions of electronic commerce include the practice of “wiring” money from one individual to another over a telegraph system. Wiring of funds continues into the present time and generally consists of a deposit of cash, a certified check, or a similar instrument of a specific monetary amount plus a service fee, with an agent who then communicates an order to a distant agent to pay out the specific amount to an individual, a company, or a bank. Accounts are then settled conventionally, as by transfer of currency, clearance of checks, or the like. Electronic commerce may be generally defined as the exchange of monetary amounts for goods, services, or the like, without the direct use of currency, implemented by non-vocal electronic communications.
More recently, the use of credit cards and debit cards to make purchases often involves the electronic transfer of funds, including electronic messages of a request and then an authorization to debit a given amount from one account and credit that amount to another account. For example, purchasing a product over the Internet may involve the electronic submission of a credit card number, an electronic communication to the credit card issuer for authorization of a total purchase price, and an electronic debiting of the customer's account when the purchase process is completed. The use of such a card to obtain cash from an ATM (automatic teller machine) also involves the equivalent of an electronic transfer of funds, including the communication of an account number, a PIN (personal identification number), and a monetary amount to a bank, and a response of an authorization to dispense the requested amount of cash from the ATM. Electronic commerce benefits consumers and businesses in terms of convenience, security, and accounting.
The majority of present day electronic commerce activities require consumers to have at least an established bank account and usually one or more credit card accounts. There are many persons, not only in the United States but throughout the world, who could benefit from electronic (i.e., “unbanked”) commerce but who do not have established bank or credit card accounts. While electronic transactions constitute a considerable percentage of current commercial transactions, the benefits of electronic commerce could be expanded to a much greater degree by new methods, infrastructure, and equipment.
The millions of “unbanked” people generally carry out financial transactions by the use of cash, money order, stored value card, or a similar vehicle that does not require a bank to complete the transaction. The use of cash to purchase goods and services is much more cumbersome to the person, as many of the transactions require some interface with a person, whether it be for the purchase of a money order, or the actual payment to an attendant or clerk representative.
An example member of the “unbanked” community includes immigrants and in particular Hispanic immigrants. One important need of the immigrant community is to transfer money back to family members in their home country. The current forms of domestic and international money transfer services offered today are very labor intensive for both the person sending the money as well as the service provider. The amount of paperwork that has to be filled out by the sender and then manually transcribed into a “communication system” by the service provider has been the ostensible justification to the customer of the high fee structure to provide this service. Some service providers, such as Western Union, use relatively “high tech” electronic communication services to transfer funds while other small service providers use “low tech” courier services to physically transport funds to their intended destination.
Currently, there are several organizations that sell domestic or international electronic person-to-person money transfers as long as the sending and receiving parties deposit and pick up the remitted funds within the same organizational network of geographically dispersed branch offices. Fees for this service can range upwards from $35 per transfer. However, convenient remittance locations for the local sender may not have corresponding convenient delivery locations for the remote receiver, or vice-versa.
In addition to financial services related to the transfer of money, immigrants are also in need of access to other basic services. Such services include access to medical care at a reasonable cost and legal counseling. Immigrants often lack medical insurance and are unfamiliar with the U.S. legal system. Legal advice often takes the form of advice regarding such common matters as immigration issues and traffic tickets. Additionally, immigrants need term life insurance, especially when the immigrant dies in the U.S. since the immigrant is the main source of income for the family and due to traditions the body of the deceased needs to be brought back to their home country.
Thus, what is needed is a method that will allow the “unbanked” communities the opportunity to make remittances and purchases along with a method that can provide needed services.